Tag: Jennifer Roberson

QuadrigaCX, the largest cryptocurrency exchange in Canada, has gone belly up, leaving 115,000 of its customers and all of Canada wondering, “What the hell just happened?”

Some $180 million CAD worth of crypto seemingly vanished when Gerald Cotten, the founder of the exchange, died in India at the age of 30, taking with him the keys to the exchange’s offline cold wallets—which, for Quadriga customers, essentially translates into “all of your money is gone.” The exchange’s customers are collectively owed $250 million CAD in both crypto and fiat.

As is often the case, it’s never a matter of what just happened. If you dig deep enough, you’ll find that the funny business—and there was plenty of it—started long ago.

I’ve cobbled together what I could find on Quadriga and assembled it into a timeline. But before we delve into that, let me introduce you to a few more characters.

Jennifer Robertson is Cotten’s widow, a woman he bequeathed all of his worldly belongings to shortly before his death. In addition to becoming the largest shareholder of Quadriga, she now owns a yacht, an airplane, and millions of dollars worth of property—assets that hordes of jilted Quadriga customers feel they now have a right to.

And then there’s Quadriga co-founder Michael Patryn. Some people—actually, a lot of people—believe Patryn is convicted money launderer Omar Dhanani and that he changed his name to disguise his criminal past after the U.S. deported him back to Canada. I am not saying Patryn is Dhanani. I’ll leave you to draw your own conclusion. But I’d be remiss not to include Dhanani’s earlier dealings on my timeline.

Also, a few words on how the exchange handled its banking. Quadriga had no company bank accounts. If you wanted to purchase crypto on the exchange, you would send your money to one of Quadriga’s third-party payment processors via a bank wire, an Interac e-transfer or a bank draft. Once your fiat was received, your Quadriga account would then be credited with QuadrigaCX Bucks (archive), a digital stand in for Canadian dollars.

According to the exchange’s website:

“All account fundings are considered to be purchases of QuadrigaCX Bucks. These are units that are used for the purposes of purchasing Bitcoin or other cryptocurrencies. QuadrigaCX Bucks are NOT Canadian Dollars. Any notation of $, CAD, or USD refers to an equivalent unit in QuadrigaCX Bucks, which exist for the sole purpose of buying and selling Bitcoin and other cryptocurrencies.

QuadrigaCX is NOT a financial institution, bank, credit union, trust, or deposit business. We DO NOT take Deposits. We exist solely for the purposes of buying and selling cryptocurrencies.”

Billerfy Labs, owned and operated by José Reyes, was one of Quadriga’s payment processors. Under a shell company called Costodian, Reyes set up accounts at Canadian Imperial Bank of Commerce (CIBC), one of the top banks in Canada. Quadriga customers would send their money to one of these accounts.

When you wanted to redeem your Quad Bucks, you would send a request to Quadriga. The exchange would forward your request to Billerfy, which would then aggregate withdrawal requests before moving large sums of money (say, $100,000 CAD at a time) out of Costodian’s accounts at CIBC to an account held by Billerfy at another bank. And from there, Billerfy would then wire the funds directly to you.

In a nutshell, that is how Quadriga moved money. It is also how the exchange got itself into a sticky situation during the crypto boom period of 2017 to 2018 when millions of dollars began pouring into Billerfy/Costodian accounts at CIBC. Banks have to comply with strict anti-money-laundering (AML) policies. This makes them averse to anything that looks like, well, money laundering.

And with that, our story actually begins a decade and a half ago.

Timeline

October 26, 2004 — The gig is up for Omar Dhanani. The 20-year-old is one of 28 people arrested in connection with Shadowcrew, an online bazaar trading in stolen credit and debit card numbers, bank account numbers and ID’s. These items were bought primarily with e-gold, a digital currency backed by gold and silver. Criminals were drawn to e-gold because it allowed them to transfer funds with little more than an email address. (Secret Service press release)

On October 4, 2014, going by the moniker “Voleur” (French for thief), Dhanani boasted in a chat room that he moved between $40,000 and 100,000 a week.

[An earlier version of this timeline stated that Dhanani was 22 at the time of his arrest. He was 22 when he pled guilty to the charges more than a year later. A Globe and Mail (outline) states he was 20 at his arrest, so I’ll go with that.]

October 29, 2004 — After news of the Shadowcrew bust hits the streets, users on ponzi-promotion forum TalkGold begin discussing the possibility that “Patryn,” a prolific user on the forum, is actually Omar Dhanani. The majority of these ponzi schemes (aka. high yield investment programs) accepted e-gold, which Dhanani processed for a fee.

E-gold was shut down in 2009, but it paved the way for other digital currencies, like Liberty Reserve, to come in and take its place in underground economies.

May 5, 2005 — In a 2005 forfeiture case, which appears to be related to his previous Shadowcrew arrest, Dhanani uses the alias “Omar Patryn.” Another claimant in that case is Nazmin Dhanani, a relative of Dhanani’s. (If you keep reading, Nazmin’s name will spring up again on this timeline in association with a “Michael Patryn.”)

If we were in front of a jury, with just this, and the burden was preponderance of the evidence — hard to imagine a jury concluding anything other than that the two people are one and the same, in my personal opinion.

November 18, 2005 — Dhanani pleads guilty to conspiracy to commit credit and bank card fraud and ID document fraud related to his Shadowcrew arrest a year earlier. (US. DOJ, Indictment, Wired) He is sentenced to 18 months in prison. (Globe and Mail)

August 9, 2006 — Dhanani, using the alias “Omar Patryn,” is arrested for driving under the influence. He gets two years’ probation and 13 days in jail. (Case summary)

April 4, 2008 — After his deportation to Canada, Dhanani returns to doing what he does best: moving money. He registers Midas Gold Exchange (archive) in Alberta under “Omar Patryn.” Midas specializes in selling digital currencies, primarily Liberty Reserve.

Liberty Reserve was a Costa Rica-based private currency exchange with its own digital currency, LR. Users could buy LRs for $1 apiece and use them to pay anyone else who had a Liberty Reserve account. The system attracted scores of criminals, ultimately leading to Liberty Reserve being shut down in 2013.

A number of Midas Gold Exchange customers are displeased with Dhanani/Patryn’s level of service. They register their grievances on Complaints.com.

October 22, 2009 — “Michael Patryn” registers MPD Advertising Inc. in Vancouver, B.C. Nazmin Dhanani is listed as an officer of the company. (If you recall, the name Nazmin appeared earlier in this timeline in association with “Omar Patryn.”) MPD dissolves on August 18, 2013. (Companies of Canada)

May 27, 2013 — Liberty Reserve is shut down by the US government, and its founder is arrested for running a massive money laundering enterprise. (DOJ)

August 21, 2013 — Michael Patryn and Lovie Horner register World BJJ Corporation in Vancouver. (Government of Canada.) Horner will later become a Quadriga shareholder. This shows that she had an established relationship with Patryn. Court documents filed in 2019, refer to her as Patryn’s “partner.”

October 31, 2013 — The final curtain descends on Liberty Reserve when its co-founder pleads guilty to money laundering and operating an unlicensed money transmitter business. (DOJ.) By now, a new digital currency is starting to make headlines. And unlike e-gold and LR, it is decentralized, meaning no central party controls it. In a 2015 video posted on Youtube, Patryn says he got involved in bitcoin in mid-2013.

November 4, 2013 — QuadrigaCX is incorporated in British Columbia. Michael Patryn is a co-founder along with Gerald Cotten, 25. (Affidavit.) One of the big stumbling blocks bitcoin exchanges in Canada face is getting banking.

“If you recall, back in the summer of 2013, there really weren’t many options here in Canada for people to buy and sell bitcoins…There was one exchange [Cavirtex] that was pretty much leading the pack….and then, other than that, you pretty much had to send a wire over to Japan [a reference to now-defunct bitcoin exchange Mt. Gox], if you wanted to buy Bitcoin…. You couldn’t hook up your bank account anywhere, it was just such a challenge.”

December 23, 2013 — Just before the platform launches, Quadriga registers as a money services business (MSB) with FINTRAC, the main supervisory body that oversees and regulates Canada’s financial services industry. According to Bitcoin Magazine, “While it isn’t strictly required by law, such registration is perceived by banks as a sign of legitimacy, and registration has minimized the number of banking issues [Quadriga] has had to face.”

December 26, 2013 — QuadrigaCX launches in beta with a staff of five. Website architect Alex Hanin continues to oversee maintenance of the platform via Connect Development Ltd, a business registered in the U.K. (The Georgia Straight)

January 30, 2014 — Boasting 1,000 users, QuadrigaCX moves out of beta. The exchange is set to add dogecoin and litecoin on top of bitcoin, which it already lists. In addition, Quadriga launches Canada’s second Bitcoin ATM, where users can exchange cash for bitcoins. The plan is to open Bitcoin ATMs all over Canada. (The Georgia Straight)

April 17, 2014 — Patryn makes the final candidate list for the Bitcoin Foundation, a nonprofit advocating the use and development of Bitcoin.

[Update: a previous version of this timeline incorrectly stated that Francis Pouliot nominated Patryn. As a volunteer for the Bitcoin Foundation, part of Pouliot’s job was to organize the election process and publish candidate information on the nonprofit’s website. He did not actually nominate Patryn. I apologize for the error.]

May 14, 2014 — In another bank workaround, Quadriga announces that it will accept gold. Users can deposit or withdraw funds from their accounts in gold bullion. Patryn tells Bitcoin Magazine: “As we have a great deal of past experience with gold trading, it was not a particularly large leap to enable XBT/XAU trades on our website.”

Accepting gold means that Quadriga has to actually store the gold. Bitcoin Magazine appears convinced Quadriga is up to the task. The pub writes:

“Anything can be lost or stolen, of course, but QuadrigaCX is big on security. Nobody wants their funds gambled on a fractional reserve system, so all deposits are backed by gold held in their vault, which the directors have years of experience storing and securing. Full details on their storage system are obviously unavailable, but their known security measures are comforting: their office itself lies behind a barred entrance, and neighbors the office of their security company.” [Emphasis mine.]

October 6, 2014 — Whiteside Capital Corporation, a shell company linked to Quadriga, is incorporated in British Columbia. As a holding company, it has no employees or contractors. (Affidavit)

November 12, 2014 — Ancetera Networks LTC., another shell company linked to Quadriga, is incorporated in British Columbia. Since the company’s only purpose is to hold shares, it also has no employees or contractors. (Affidavit)

January 26, 2015 — Ancetera Networks changes its name to Fintech Solutions. (BC Laws). Lovie Horner is listed as an executive (Bloomberg). Anthony Milewski, William Filtness, and Natasha Tsai, are also directors. (Business Wire)

January 31, 2015 — Despite the positive media coverage, Quadriga is struggling to keep its business afloat. According to a prospectus filed this year, the trading platform pulled in a mere $22,168 CAD in revenue during the three-month period ending January 31, 2015. The company’s net loss for the period was almost $90,000 CAD. (Globe and Mail)

February 5, 2015 — According to a listing in S&P Global, Lovie Horner joins Quadriga as VP of business development. She has a background in fashion design.

February 23, 2015 — Two of Canada’s biggest crypto exchanges shutter, making Quadriga the biggest crypto exchange in Canada. Vault of Satoshi turned off its lights on February 17, and now Cavirtex says it plans to wind down. (Bitcoin Magazine)

In an episode of the #BlockTalk podcast, Patryn explains that a reverse takeover will eliminate the paperwork involved with getting listed the usual way—via an IPO. The exchange is set to trade under “Quadriga Fintech Solutions.” Public trading is expected to commence with the Canadian Securities Exchange (CSE) by early April.

Quadriga also boasts it will undergo a full financial audit by Wolrige Mahon LLP. “We’re excited to be able to provide an unparalleled level of transparency by merging legacy financial audits with innovative blockchain technology,” Cotten tells Bitcoin Magazine.

But after the big announcement, things go directly downhill. Quadriga burns through all of its investment capital, and Patryn brings a lawsuit against Robert Lawrence, the Vancouver businessman he and Cotten enlisted to help them take the company public.

“In Mr. Patryn’s telling, Mr. Lawrence failed to perform his duties properly and the company was never able to list. Mr. Lawrence raised a total of $850,000, of which $150,000 came from Mr. Patryn. But by June, 2015, the company had run out of money and lost 45 percent of its market share, according to Mr. Patryn’s statement of claim. Mr. Patryn said much of the money had to be spent correcting the “poor quality” of Mr. Lawrence’s work. Investors pitched in another $600,000, including $200,000 from Mr. Patryn, to keep the company from failing.

By February, 2016, Quadriga gave up on its plans to list and severed its relationship with Mr. Patryn, he said in court documents, owing to his perceived association with Mr. Lawrence. “News of his termination from QCX has materially and negatively affected his ability to secure similar work in the financial technology industry,” Mr. Patryn’s statement of claim read.

In a response, Mr. Lawrence denied the allegations and said Mr. Patryn approached him, not the other way around. Moreover, Quadriga’s failure was its own fault – and Mr. Patryn was the company’s “controlling mind,” he asserted. (Mr. Cotten is scarcely mentioned in the lawsuit.) Mr. Lawrence sought to have it dismissed. No filings have been made in the case since 2016. Mr. Lawrence could not be reached for comment.”

April 16, 2015 — With great enthusiasm, Quadriga renews its plans to install Bitcoin ATMs across Canada. According to Buying Bitcoin, “These new BitXATM machines also will be modified to allow for direct cash deposits and withdrawals from customers’ QuadrigaCX balances.” But like many of Quadriga’s plans, none of this actually happens.

[Where did Quadriga put all that cash if it had no banking? Read my update Quadriga, Quadriga, Quadriga, which talks about how some Quadriga customers claim to have been receiving withdrawals in the form of actual boxes of cash delivered to their door.]

September 29, 2015 — According to SEDAR, Quadriga publishes its last “certification of interim filings.” In other words, its last financial audit.

November 12, 2015 — Quadriga announces the formation of a blockchain R&D lab—Canada’s first! However, like past Quadriga projects, this one is long on hot air and short on follow through. According to the press release, the lab’s first task is to develop a “platform with two core functions: handling the onboarding and client data management for financial crime systems using the Blockchain and facilitating machine to machine (M2M) payments with Internet of Things (IoT) providers for connected cities.”

February 29, 2016 — At this juncture, Patryn has supposedly left Quadriga. The reason, he tells Globe and Mail, is because he disagreed with Cotten’s decision to call off listing the company. Quadriga makes a passing mention on Reddit that Patryn is gone, but there is no formal announcement. On the heels of Patryn’s departure, Anthony Milewski and Lovie Horner also resign. (Business Wire)

March 8, 2016 — Quadriga is banned from selling securities altogether whenthe British Columbia Securities Commission issues a cease trade order. Apparently, Quadriga has not submitted a financial audit for the year ended October 31, 2015. A “Management’s Discussion and Analysis” is also missing.

March 18, 2016 — Director William Filtness and chief financial officer Natasha Tsaistep down from Quadriga. Cotten is now a one-man band, managing the majority of work from his laptop, wherever he happens to be. The servers are in the cloud on Amazon Web Services. According to court documents filed in January 2019, he also “took sole responsibility” for handling the exchange’s coins.

Robertson's affidavit gives an inside look at how these crypto exchanges operate. Cotten (her husband and the sole officer of Quadriga till his death on 12/9/18) was a one man band. He ran the exchange from his laptop from wherever he happened to be. https://t.co/6iivVMpbe1

April 5, 2017 — Cotten’s partner, Jennifer Kathleen Margaret Griffith changes her last name to Robertson. (Royal Gazette.) According to CBC, she has also used the name Jennifer Forgeron in the past.

June 2, 2017 — Quadriga announces on Reddit (archive) that it has lost some 67,000 ether (ETH) worth about $14 million USD due to a software glitch. The exchange says:

“While this issue poses a setback to QuadrigaCX, and has unfortunately eaten into our profits substantially, it will have no impact on account funding or withdrawals and will have no impact on the day to day operation of the exchange.”

August 21, 2017 — Quadriga customers begin reporting delays in redeeming their Quad Bucks. In emails with clients, Cotten blames the “Canadian banking cartel” for the wire delays, saying they are out to “stifle bitcoin adoption” in the country. (Globe and Mail)

September 26, 2017 — On behalf of Billerfy, José Reyes applies to open three commercial banking accounts at the Canadian Imperial Bank of Commerce (CIBC) Beaver Creek Branch. (Interpleader order)

November 28, 2017 — CIBC’s anti-money laundering department reviews the Reyes’ account opening documentation at the Beaver Creek Branch. After the bank learns that Billerfy is a money service business, it closes the accounts. (Interpleader order)

November 30, 2017 — Reyes applies to open two small business banking accounts at CIBC’s Bayview Village Branch on behalf of Costodian, a shell company. One is an “expense account,” the other is a “transaction account.” Reyes tells the bank that Costodian is “[n]ot related to Billerfy’s CMO business.” (Interpleader order)

December 17, 2017 — After a spectacular run up, bitcoin reaches on all time high of nearly $20,000 USD. According to the Globe and Mail, $1.2 billion worth of bitcoin traded on Quadriga in 2017. The exchange took a commission on every trade.

December 4, 2017 – February 20, 2018 — At the height of the crypto bubble, millions of dollars flood into bank accounts that Reyes opened up at CIBC to collect Quadriga funds. In three months, 388 depositors make 465 deposits to Costodian’s “transaction account” in the total amount of $67 million CAD. (Some of the money is eventually withdrawn, leaving roughly $26 million CAD.)

December 22 – 28, 2017—Reyes transfers $2.3 million CAD from Costodian’s “transaction account” to his personal checking and savings accounts. He admits to CIBC he did not notify Quadriga prior to transferring the money to his personal accounts. (Interpleader order)

January 8, 2018 — CIBC is unsure of who the $26 million CAD belongs to, so it freezes two accounts belonging to Costodian and José Reyes. In an interpleader order, the bank asks the court to take possession of the funds and decide who they belong to —QuadrigaCX, Costodian or the depositors. Cotten fights back, claiming CIBC had no right to freeze the funds. Quadriga has already credited depositors with Quad Bucks.

February 8, 2018 — According to the Globe and Mail, a new company 700964 NB is registered in New Brunswick as “part of a network of entities that helped move millions of dollars around so Quadriga could take deposits and facilitate withdrawals, sometimes in the form of physical bank drafts, for its clients.” Aaron Matthews, Quadriga’s director of operations, and Sarah-Lynn Matthews are listed as owners, but the address on the registration leads to a rickety trailer in a mobile home park.

February 16, 2018 — CIBC is still trying to sort out who the $26 million CAD belong to. The bank asks Jose Reyes (the person who controls the frozen accounts) if it is okay to speak to someone at Quadriga. Reyes declines, because Cotten had indicated that he was not interested in speaking with anyone at CIBC. (Interpleader order)

June 8, 2018 — Cotten and Jennifer Robertson legally marry, according to Globe and Mail, who obtained the marriage certificate. Although, several Reddit posters, who claim they saw Robertson’s Facebook page, insist the couple got married on October 8, 2018.

July 2018 — Michael Patryn hires Reputation.ca to remove negative content about him on Complaints.com, where he is referenced as a money launderer. Patryn later sues Reputation.ca for not moving fast enough, according to the Globe and Mail, who reviewed the court documents.

November 9, 2018 — The Ontario Superior Court grants CIBC an interpleader order allowing the court to take control of Quadriga/Custodian’s $26 million CAD in funds until the ownership of the funds can be established. (CoinDesk) (Globe and Mail)

November 27, 2018 — Cotten signs a will, leaving all his belongings to Robertson, including several properties, a 2017 Lexus, an airplane, a 2015 Mini Cooper and a 51-foot Jeanneau sailboat. He goes a step further and details the distribution of his assets should Robertson not survive him, even specifying that $100,000 CAD go to his dogs.

After some digging, CBC learns that Cotten’s widow has a company called Robertson Nova Property Management. Apparently, she, her husband and her company bought 16 properties between May 2016 and October 2018, worth $7.5 million CAD.

“Little is known about Ms. Robertson, who appears to have used three different surnames since she began buying real estate in Nova Scotia with Mr. Cotten in 2016,” reports Globe and Mail in February 2019.

November 30, 2018 — Cotten and wife Jennifer Robertson arrive in New Delhi, India. They have come to the country to celebrate their honeymoon and participate in the opening of an Angel House orphanage they sponsored. (Globe and Mail)

December 3, 2018 — Physical cash pickups up to $2,500 now available for Quadriga customers. According to the Reddit (archive) announcement: “We have partnered with selected stores to provide local cash pickup — as we have just started exploring this new method, only one store in Montreal, QC has been set up at the moment. We have another store going live next week in Cornwall, ON and hopefully many more.”

We are excited to announce our new withdrawal method: Physical Cash Pickup. We have partnered with selected stores to provide local cash pickup. To find out more please check out the link: https://t.co/qoInt3PXXI

December 4, 2018 — Quadriga announces on Reddit (archive) that Ontario Superior Court is releasing the funds that CIBC held “hostage” to Costodian, its payment processor. Quadriga writes: “According to our counsel, the funds should be paid out by the end of this week.” However, new problems ensue when the court issues the funds back to Costodian in the form of bank drafts, which Custodian has trouble finding another bank to accept.

December 8, 2018 — At 5:15 p.m. Cotten and Robertson land in Jaipur, where they plan to spend four nights at the high-end Oberoi Rajvilas for $923 a night. Soon after the couple check in, Cotten gets a belly ache. At 9:45 p.m., he checks into Fortis Escorts Hospital. He spends the night at the hospital in a private room. (Globe and Mail)

December 9, 2018 — Cotten’s condition deteriorates. At 7:26 p.m. he is declared dead due to complications of Crohn’s disease. The cause of death is cardiac arrest. (Globe and Mail.) Robertson withholds the news from Quadriga customers for more than a month. Meanwhile, the exchange continues to accept deposits. (Affidavit)

She later tells The Globe: “That guy [a representative from the hotel] told me the body will come from the hotel. I said: ‘Why the hotel? I’m not taking any body from the hotel, it should come from Fortis.”

December 10, 2018 — SMS Medical College issues an embalming certificate for Cotten’s body. Sangita Chauhan, who heads the anatomy department there, does not actually see the body. Instead, a junior staffer handles the processing. The body is picked up by staffers at Cotten’s hotel, Oberoi. (Globe and Mail)

December 10, 2018 — Robertson checks out of the Oberoi and heads back to Canada “with the body,” according to the Globe and Mail.

December 13, 2018 — Cotten’s death is registered with the Government of Rajasthan Directorate of Economics and Statistics. “The death certificate, obtained by The Globe, lists his “address at time of death” as the Oberoi Rajvilas.” However, a death certificate, later obtained by CoinDesk, lists his “place of death” as Fortis Escorts Hospital.

December 13, 2018 — The Angel House orphanage that Cotten and Robertson funded opens in Venkatapuram, India. The money the couple donated only paid for materials. The building is still missing several doors, including one to the bathroom. And the man running the orphanage is going into debt. (Globe and Mail)

December 14, 2018 — A funeral service is held for Cotten at J.A. Snow Funeral Home in Halifax Nova Scotia. (Reddit)

Meanwhile, by December, withdrawals from Quadriga have all but ground to a halt. Reddit /r/QuadrigaCX has become awash with people complaining they cannot get their money out of the exchange. (David Gerard.)

My last Oct withdrawal marked Complete on Dec.27th while still not been received yet. A withdrawal of 0.25 Bitcoin on Jan. 21th is still pending. Very annoying!!! I am not able to withdraw any crypto or QCX bucks from the platform. Please do update what's going on.

January 14, 2019 — Quadriga finally announces that its CEO is deceased. Cotten’s widow posts an announcement on the Quadriga website explaining that Cotten passed away in India while opening an orphanage. To quell any suspicions that he ran off with everyone’s money, she bestows her husband with a host of virtuous qualities:

“Gerry cared deeply about honesty and transparency—values he lived by in both his professional and personal life. He was hardworking and passionate, with an unwavering commitment to his customers, employees, and family.”

Robertson also recommends that Quadriga’s head of operations Aaron Matthews assume the role of interim president and CEO. Later, it appears Matthews denies he is CEO.

I spoke with Aaron Matthews (Listed in Jennifer Robertson's affidavit), who is currently a contractor for @QuadrigaCoinEx. He is NOT the interim-CEO. He gave some insight into the capacity of his work at Qcx and his relationship with Gerald. #QuadrigaCXpic.twitter.com/YlUnKCdfcV

Meanwhile, Quadriga’s customers are now having trouble getting their crypto out of the exchange. There is no reason for this. Crypto should move directly from the exchange to the customer. This leads to concern that maybe the funds aren’t actually there.

"Has anyone been able to move any crypto off Quadriga in the last 24hrs…?"

January 22, 2019 — Robertson sends a petition to the Supreme Court of British Columbia requesting a shareholder meeting to appoint new board members to Quadriga, because effectively, the company has no board.

January 25, 2019 — Quadriga holds a shareholder meeting (Michael Patryn, Lovie Horner, and Jennifer Robertson). Robertson, her stepfather Thomas Beazley, and a man named Jack Martel are appointed as new directors. They decide to suspend Quadriga’s operations, but hold off on sharing this news with Quadriga’s customers. (Affidavit)

January 26, 2019 — The newly appointed directors instruct that the platform be paused. According to affidavit Robertson files on January 31, “The pause will mean that future trades of cryptocurrency will be temporarily suspended, including the settlement of cash or the trading of currency between users.”

January 28, 2019 — The board meeting was on a Friday. All weekend long, anxious Quadriga customers wait to hear some news. On Monday, they wake to find a large notice on the exchange’s website indicating the site is down for maintenance. (CoinDesk)

January 29, 2019 — Cotten’s widow moves to protect her property. According to the Chronicle Herald, at the end of January, “Robertson took her deceased husband’s name from the ownership of the four properties, worth a combined $1.1 million, then took out collateral mortgages on all four in favour of a trust of which she is a trustee, and finally transferred ownership of at least two of those properties to that trust.” The name of the trust is the Seaglass Trust.

January 31, 2019 — Quadriga’s website remains in “maintenance mode” for three long, nail-biting days. Then a new notice appears, basically stating the company is bankrupt. Quadriga’s board members have applied for creditor protection (affidavit) with the Nova Scotia Supreme Court. A preliminary hearing is set for February 5.

Buried in the notice is alarming news. Quadriga is scrambling to locate its cold wallets. Most exchanges typically keep the majority of their crypto in offline wallets for security reasons. The situation, is akin to a bank misplacing all of its money.

We lost the $150 million in cryptocurrencies that we held for customers because our founder died and he was the only one with the passwords to the wallets. Welcome to the financial future! https://t.co/81auPh1lxZ

February 5, 2019 — Represented by Maurice Chaisson, a lawyer with Stewart McKelvey, Quadriga appears in court for its creditor protection hearing. The court appoints Ernst & Young (EY) as a monitor in charge of tracking down the $250 million CAD collectively owed to Quadriga’s customers. The exchange is also granted a 30-day stay, meaning customers are unable to sue the exchange in that time. (CoinDesk.) Quadriga updates its website with a new announcement (archive.)

Here’s an example of Quadriga’s bookkeeping. These are apparently bank drafts. According to Chiasson they are now, “Off the stove.” pic.twitter.com/yvglesMHyM

February 5, 2019 — With keys to the exchange’s cold wallets gone missing, many are wondering if Cotten staged his death. CoinDesk posts a death certificate with Cotten’s name misspelled as “Cottan.” Apparently, fake death certificates are easy to come by in India.

February 7, 2019 — Fortis Escorts, the hospital in Jaipur, India where Cotten passed, releases a statement confirming his death. Cotten arrived the hospital in a “critical condition” with “pre-existing Crohn’s disease and was on monoclonal antibody therapy every 8th week.” He was diagnosed with septic shock and other horrible things. (CoinDesk)

February 8, 2019 — CoinDesk reports that crypto funds were moving through the Quadriga platform up to Cotten’s death. In a series of transactions sent from the exchange’s internet-connected hot wallets, more than 9,000 ETH moved from Quadriga to a handful of other exchanges, including Binance, Bitfinex, Kraken and Poloniex. Most of that crypto was transferred the week before Cotten’s death, but there is no telling who initiated the transactions—the exchange, its customers, or both.

February 8, 2019 — The Ontario Securities Commission announces that it will look into Quadriga. (Reuters). The news comes just days after the British Columbia Securities Commission said it had no reach into the exchange. (Reuters)

February 11, 2019 — Jack Martel resigns from Quadriga’s board of directors, leaving Jennifer Robertson and her stepfather Thomas Beazley as the only two directors.

February 12, 2019 — Things just keep getting worse for Quadriga creditors. In its initial report, the monitor reveals that on February 6—a day after Quadriga was granted creditor protection—the exchange “inadvertently” sent 104 of the bitcoin it was holding in its hot wallets (worth $468,675 CAD) to its dead CEO’s cold wallet.

The hot wallets now contain 51 bitcoin, 33 bitcoin cash, 2,032 bitcoin gold, 822 litecoin, and 951 ether—worth $434,068 CAD, less than half the value of what they held before.

February 14, 2019 — Nova Scotia Supreme Court Judge Michael Wood appoints law firms Miller Thomson and Cox & Palmer to represent the more than 115,000 Quadriga creditors throughout the CCAA proceedings. Miller Thomson is the lead counsel located in Toronto; Cox & Palmer is the local counsel. The scope of their work is spelled outhere.

February 20, 2019 — In its second monitor report, Ernst & Young reveals that the sending of 104 bitcoin to Quadriga’s cold wallets earlier was due to a “platform setting error.” The CCAA process is also running low on funds. EY is in possession of millions of dollars in bank drafts from Quadriga and its payment processors. The problem is getting banks to accept the funds. (Read my story here.)

February 22, 2019 — The court issues a “Banking arrangement order” at the request of Ernst and Young (EY). The order offers limited protection to the Bank of Montreal (BOM) and the Royal Bank of Canada (RBC) for handling bank drafts related to Quadriga and its payment processors. And, with regard to a disputed $5 million CAD bank draft, $60,958.64 of that is to be paid to Costodian principal Jose Reyes, because EY determined that these were his personal funds. And $778,213.94, which Custodian claims it is owed in unpaid transaction fees, will go into trust account pending further order of the court.

February 25, 2019 — Robertson files a second affidavit. In it, she asks for an extension of the stay of proceedings in the CCAA and the appointment of Peter Wedlake, a senior vice president and partner at tax and accounting firm Grant Thornton, to the position of chief restructuring officer (CRO) for Quadriga. The CRO would fill the director position left vacant by Jack Martel stepping down on February 11. Thornton apparently has cryptocurrency experience and is a “certified bitcoin professional.”

February 28, 2019 — Globe and Mail (archive) tracks down a booking photo of Omar Dhanani and posts it alongside a screengrab of Michael Patryn taken from a Youtube video off the internet. The two faces look strikingly similar.

March 13, 2019 — The law firm representing Quadriga in the CCAA proceedings tells the court that it is stepping down, effective immediately. Stewart McKelvey had been representing both Quadriga and the estate of Quadriga’s dead CEO, which led to concerns of a potential conflict of interest from the monitor and the representative counsel. Stewart McKelvey will continue to represent Robertson’s estate.

March 19, 2019 — Bloomberg straight out announces that Michael Patryn is Omar Dhanani. Reporters tracked down the actual documents showing two name changes. “Patryn changed his name from Omar Dhanani to Omar Patryn with the British Columbia government in March 2003. Five years later, he registered a name change to Michael Patryn in the same Canadian province.”

March 19, 2019 — The representative counsel in Quadriga’s CCAA now have a voice to listen to. Miller Thomson and Cox & Palmer appointed a steering committee to help them represent 115,000 of the exchange’s creditors. The members include: Parham Pakjou, David Ballabh, Eric Bachour, Ryan Kneer, Magdalena Gronowska, Eric Stevens and Nicolas Deziel, with Richard Kagerer and Marian Drumea assigned as alternates.

April 18, 2019 — Next hearing scheduled.

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This timeline is a work in progress. If you see anything that is missing, inaccurate or needs further clarification, let me know. You can also DM me on Twitter. And please consider supporting my work on Patreon!